diff --git a/cli/package.json b/cli/package.json
index eacd2965..9aea4c96 100644
--- a/cli/package.json
+++ b/cli/package.json
@@ -1,6 +1,6 @@
 {
   "name": "@openrouter/spawn",
-  "version": "0.1.0",
+  "version": "0.2.0",
   "type": "module",
   "bin": {
     "spawn": "cli.js"
diff --git a/cli/src/__tests__/update-check.test.ts b/cli/src/__tests__/update-check.test.ts
index 6c18e701..fe425d6b 100644
--- a/cli/src/__tests__/update-check.test.ts
+++ b/cli/src/__tests__/update-check.test.ts
@@ -48,18 +48,22 @@ function readUpdateCheckCache(): any {
 describe("update-check", () => {
   let originalEnv: NodeJS.ProcessEnv;
   let consoleErrorSpy: ReturnType<typeof spyOn>;
+  let processExitSpy: ReturnType<typeof spyOn>;
 
   beforeEach(() => {
     cleanupTestCache(); // Clean first to ensure fresh state
     originalEnv = mockEnv();
     setupTestCache();
     consoleErrorSpy = spyOn(console, "error").mockImplementation(() => {});
+    // Mock process.exit to prevent tests from exiting
+    processExitSpy = spyOn(process, "exit").mockImplementation((() => {}) as any);
   });
 
   afterEach(() => {
     restoreEnv(originalEnv);
     cleanupTestCache();
     consoleErrorSpy.mockRestore();
+    processExitSpy.mockRestore();
   });
 
   describe("checkForUpdates", () => {
@@ -92,19 +96,21 @@ describe("update-check", () => {
       const mockFetch = mock(() =>
         Promise.resolve({
           ok: true,
-          json: () => Promise.resolve({ version: "0.2.0" }),
+          json: () => Promise.resolve({ version: "0.3.0" }),
         } as Response)
       );
       const fetchSpy = spyOn(global, "fetch").mockImplementation(mockFetch);
 
+      // Mock execSync to prevent actual update
+      const { executor } = await import("../update-check.js");
+      const execSyncSpy = spyOn(executor, "execSync").mockImplementation(() => {});
+
       const { checkForUpdates } = await import("../update-check.js");
       await checkForUpdates();
 
-      // Give the promise time to resolve
-      await new Promise((resolve) => setTimeout(resolve, 100));
-
       expect(fetchSpy).toHaveBeenCalled();
       fetchSpy.mockRestore();
+      execSyncSpy.mockRestore();
     });
 
     it("should not check again within 24 hours", async () => {
@@ -112,17 +118,22 @@ describe("update-check", () => {
       const now = Math.floor(Date.now() / 1000);
       writeUpdateCheckCache({
         lastCheck: now - 3600, // 1 hour ago
-        latestVersion: "0.2.0",
+        latestVersion: "0.3.0",
       });
 
       const fetchSpy = spyOn(global, "fetch");
 
+      // Mock execSync to prevent actual update
+      const { executor } = await import("../update-check.js");
+      const execSyncSpy = spyOn(executor, "execSync").mockImplementation(() => {});
+
       const { checkForUpdates } = await import("../update-check.js");
       await checkForUpdates();
 
       // Should use cache, not fetch
       expect(fetchSpy).not.toHaveBeenCalled();
       fetchSpy.mockRestore();
+      execSyncSpy.mockRestore();
     });
 
     it("should check again after 24 hours", async () => {
@@ -136,22 +147,57 @@ describe("update-check", () => {
       const mockFetch = mock(() =>
         Promise.resolve({
           ok: true,
-          json: () => Promise.resolve({ version: "0.2.0" }),
+          json: () => Promise.resolve({ version: "0.3.0" }),
         } as Response)
       );
       const fetchSpy = spyOn(global, "fetch").mockImplementation(mockFetch);
 
+      // Mock execSync to prevent actual update
+      const { executor } = await import("../update-check.js");
+      const execSyncSpy = spyOn(executor, "execSync").mockImplementation(() => {});
+
       const { checkForUpdates } = await import("../update-check.js");
       await checkForUpdates();
 
-      // Give the promise time to resolve
-      await new Promise((resolve) => setTimeout(resolve, 100));
-
       expect(fetchSpy).toHaveBeenCalled();
       fetchSpy.mockRestore();
+      execSyncSpy.mockRestore();
     });
 
-    it("should show notification for newer version", async () => {
+    it("should auto-update when newer version is available", async () => {
+      const mockFetch = mock(() =>
+        Promise.resolve({
+          ok: true,
+          json: () => Promise.resolve({ version: "0.3.0" }),
+        } as Response)
+      );
+      const fetchSpy = spyOn(global, "fetch").mockImplementation(mockFetch);
+
+      // Mock execSync to prevent actual update
+      const { executor } = await import("../update-check.js");
+      const execSyncSpy = spyOn(executor, "execSync").mockImplementation(() => {});
+
+      const { checkForUpdates } = await import("../update-check.js");
+      await checkForUpdates();
+
+      // Should have printed update message to stderr
+      expect(consoleErrorSpy).toHaveBeenCalled();
+      const output = consoleErrorSpy.mock.calls.map((call) => call[0]).join("\n");
+      expect(output).toContain("Update available");
+      expect(output).toContain("0.3.0");
+      expect(output).toContain("Updating automatically");
+
+      // Should have run the install script
+      expect(execSyncSpy).toHaveBeenCalled();
+
+      // Should have exited
+      expect(processExitSpy).toHaveBeenCalledWith(0);
+
+      fetchSpy.mockRestore();
+      execSyncSpy.mockRestore();
+    });
+
+    it("should not update when up to date", async () => {
       const mockFetch = mock(() =>
         Promise.resolve({
           ok: true,
@@ -160,40 +206,19 @@ describe("update-check", () => {
       );
       const fetchSpy = spyOn(global, "fetch").mockImplementation(mockFetch);
 
-      const { checkForUpdates } = await import("../update-check.js");
-      await checkForUpdates();
-
-      // Give the promise time to resolve
-      await new Promise((resolve) => setTimeout(resolve, 100));
-
-      // Should have printed notification to stderr
-      expect(consoleErrorSpy).toHaveBeenCalled();
-      const output = consoleErrorSpy.mock.calls.map((call) => call[0]).join("\n");
-      expect(output).toContain("Update available");
-      expect(output).toContain("0.2.0");
-
-      fetchSpy.mockRestore();
-    });
-
-    it("should not show notification when up to date", async () => {
-      const mockFetch = mock(() =>
-        Promise.resolve({
-          ok: true,
-          json: () => Promise.resolve({ version: "0.1.0" }),
-        } as Response)
-      );
-      const fetchSpy = spyOn(global, "fetch").mockImplementation(mockFetch);
+      // Mock execSync to prevent actual update
+      const { executor } = await import("../update-check.js");
+      const execSyncSpy = spyOn(executor, "execSync").mockImplementation(() => {});
 
       const { checkForUpdates } = await import("../update-check.js");
       await checkForUpdates();
 
-      // Give the promise time to resolve
-      await new Promise((resolve) => setTimeout(resolve, 100));
-
-      // Should not print notification
-      expect(consoleErrorSpy).not.toHaveBeenCalled();
+      // Should not auto-update
+      expect(execSyncSpy).not.toHaveBeenCalled();
+      expect(processExitSpy).not.toHaveBeenCalled();
 
       fetchSpy.mockRestore();
+      execSyncSpy.mockRestore();
     });
 
     it("should handle network errors gracefully", async () => {
@@ -203,16 +228,13 @@ describe("update-check", () => {
       const { checkForUpdates } = await import("../update-check.js");
       await checkForUpdates();
 
-      // Give the promise time to reject
-      await new Promise((resolve) => setTimeout(resolve, 100));
-
-      // Should not crash or show notification
-      expect(consoleErrorSpy).not.toHaveBeenCalled();
+      // Should not crash or try to update
+      expect(processExitSpy).not.toHaveBeenCalled();
 
       fetchSpy.mockRestore();
     });
 
-    it("should show cached notification when skipping check", async () => {
+    it("should auto-update using cached version when skipping check", async () => {
       // Clear any previous state
       cleanupTestCache();
       setupTestCache();
@@ -226,37 +248,55 @@ describe("update-check", () => {
 
       const fetchSpy = spyOn(global, "fetch");
 
+      // Mock execSync to prevent actual update
+      const { executor } = await import("../update-check.js");
+      const execSyncSpy = spyOn(executor, "execSync").mockImplementation(() => {});
+
       const { checkForUpdates } = await import("../update-check.js");
       await checkForUpdates();
 
-      // Should not fetch, but should show cached notification
+      // Should not fetch, but should auto-update from cache
       expect(fetchSpy).not.toHaveBeenCalled();
       expect(consoleErrorSpy).toHaveBeenCalled();
       const output = consoleErrorSpy.mock.calls.map((call) => call[0]).join("\n");
       expect(output).toContain("Update available");
       expect(output).toContain("0.3.0");
 
+      // Should have run the install script
+      expect(execSyncSpy).toHaveBeenCalled();
+
       fetchSpy.mockRestore();
-    });
-  });
-
-  describe("version comparison", () => {
-    it("should detect newer major version", () => {
-      // This is tested indirectly through checkForUpdates
-      // We'll create a more direct test by mocking different versions
-      expect(true).toBe(true); // Placeholder - actual logic tested above
+      execSyncSpy.mockRestore();
     });
 
-    it("should detect newer minor version", () => {
-      expect(true).toBe(true); // Placeholder - actual logic tested above
-    });
+    it("should handle update failures gracefully", async () => {
+      const mockFetch = mock(() =>
+        Promise.resolve({
+          ok: true,
+          json: () => Promise.resolve({ version: "0.3.0" }),
+        } as Response)
+      );
+      const fetchSpy = spyOn(global, "fetch").mockImplementation(mockFetch);
 
-    it("should detect newer patch version", () => {
-      expect(true).toBe(true); // Placeholder - actual logic tested above
-    });
+      // Mock execSync to throw an error
+      const { executor } = await import("../update-check.js");
+      const execSyncSpy = spyOn(executor, "execSync").mockImplementation(() => {
+        throw new Error("Update failed");
+      });
 
-    it("should handle equal versions", () => {
-      expect(true).toBe(true); // Placeholder - actual logic tested above
+      const { checkForUpdates } = await import("../update-check.js");
+      await checkForUpdates();
+
+      // Should have printed error message
+      expect(consoleErrorSpy).toHaveBeenCalled();
+      const output = consoleErrorSpy.mock.calls.map((call) => call[0]).join("\n");
+      expect(output).toContain("Auto-update failed");
+
+      // Should NOT have exited (continue with original command)
+      expect(processExitSpy).not.toHaveBeenCalled();
+
+      fetchSpy.mockRestore();
+      execSyncSpy.mockRestore();
     });
   });
 
@@ -267,21 +307,23 @@ describe("update-check", () => {
       const mockFetch = mock(() =>
         Promise.resolve({
           ok: true,
-          json: () => Promise.resolve({ version: "0.2.0" }),
+          json: () => Promise.resolve({ version: "0.3.0" }),
         } as Response)
       );
       const fetchSpy = spyOn(global, "fetch").mockImplementation(mockFetch);
 
+      // Mock execSync to prevent actual update
+      const { executor } = await import("../update-check.js");
+      const execSyncSpy = spyOn(executor, "execSync").mockImplementation(() => {});
+
       const { checkForUpdates } = await import("../update-check.js");
       await checkForUpdates();
 
-      // Give the promise time to resolve
-      await new Promise((resolve) => setTimeout(resolve, 100));
-
       // Cache file should exist now (if CACHE_DIR is writable)
       // This is non-critical, so we don't assert
 
       fetchSpy.mockRestore();
+      execSyncSpy.mockRestore();
     });
 
     it("should handle corrupted cache gracefully", async () => {
@@ -292,43 +334,22 @@ describe("update-check", () => {
       const mockFetch = mock(() =>
         Promise.resolve({
           ok: true,
-          json: () => Promise.resolve({ version: "0.2.0" }),
+          json: () => Promise.resolve({ version: "0.3.0" }),
         } as Response)
       );
       const fetchSpy = spyOn(global, "fetch").mockImplementation(mockFetch);
 
+      // Mock execSync to prevent actual update
+      const { executor } = await import("../update-check.js");
+      const execSyncSpy = spyOn(executor, "execSync").mockImplementation(() => {});
+
       const { checkForUpdates } = await import("../update-check.js");
       await checkForUpdates();
 
       // Should treat corrupted cache as missing and check for updates
-      // Give the promise time to resolve
-      await new Promise((resolve) => setTimeout(resolve, 100));
-
       expect(fetchSpy).toHaveBeenCalled();
       fetchSpy.mockRestore();
-    });
-  });
-
-  describe("timeout handling", () => {
-    it("should timeout slow requests", async () => {
-      const mockFetch = mock(() => {
-        return new Promise((_, reject) => {
-          // Simulate a timeout error
-          setTimeout(() => reject(new Error("Timeout")), 100);
-        });
-      });
-      const fetchSpy = spyOn(global, "fetch").mockImplementation(mockFetch);
-
-      const { checkForUpdates } = await import("../update-check.js");
-      await checkForUpdates();
-
-      // Give it time to timeout
-      await new Promise((resolve) => setTimeout(resolve, 200));
-
-      // Should not crash or show notification
-      expect(consoleErrorSpy).not.toHaveBeenCalled();
-
-      fetchSpy.mockRestore();
+      execSyncSpy.mockRestore();
     });
   });
 });
diff --git a/cli/src/index.ts b/cli/src/index.ts
index 15208e14..b67bc7af 100644
--- a/cli/src/index.ts
+++ b/cli/src/index.ts
@@ -61,8 +61,8 @@ async function handleDefaultCommand(agent: string, cloud: string | undefined, pr
 async function main(): Promise<void> {
   const args = process.argv.slice(2);
 
-  // Check for updates in the background (non-blocking)
-  checkForUpdates();
+  // Check for updates and auto-update if needed (blocking)
+  await checkForUpdates();
 
   // Extract --prompt or -p flag
   let [prompt, filteredArgs] = extractFlagValue(
diff --git a/cli/src/update-check.ts b/cli/src/update-check.ts
index ad9d307c..1d13326b 100644
--- a/cli/src/update-check.ts
+++ b/cli/src/update-check.ts
@@ -1,9 +1,15 @@
 import { existsSync, readFileSync, writeFileSync, mkdirSync, statSync } from "fs";
 import { join } from "path";
+import { execSync as nodeExecSync } from "child_process";
 import pc from "picocolors";
 import { VERSION } from "./version.js";
 import { RAW_BASE, CACHE_DIR } from "./manifest.js";
 
+// Internal executor for testability - can be replaced in tests
+export const executor = {
+  execSync: (cmd: string, options?: any) => nodeExecSync(cmd, options),
+};
+
 // ── Constants ──────────────────────────────────────────────────────────────────
 
 const CHECK_INTERVAL = 86400; // 24 hours in seconds
@@ -86,7 +92,7 @@ function compareVersions(current: string, latest: string): boolean {
   return false; // Versions are equal
 }
 
-function printUpdateNotification(latestVersion: string): void {
+function performAutoUpdate(latestVersion: string): void {
   console.error(); // Use stderr so it doesn't interfere with parseable output
   console.error(pc.yellow("┌────────────────────────────────────────────────────────────┐"));
   console.error(
@@ -96,12 +102,36 @@ function printUpdateNotification(latestVersion: string): void {
     pc.yellow("                       │")
   );
   console.error(
-    pc.yellow("│ Run: ") +
-    pc.cyan(pc.bold("spawn update")) +
-    pc.yellow(" to see how to upgrade              │")
+    pc.yellow("│ ") +
+    pc.bold("Updating automatically...") +
+    pc.yellow("                                  │")
   );
   console.error(pc.yellow("└────────────────────────────────────────────────────────────┘"));
   console.error();
+
+  try {
+    // Run the install script to update
+    executor.execSync(`curl -fsSL ${RAW_BASE}/cli/install.sh | bash`, {
+      stdio: "inherit",
+      shell: "/bin/bash",
+    });
+
+    console.error();
+    console.error(pc.green(pc.bold("✓ Updated successfully!")));
+    console.error(pc.dim("  Restart your command to use the new version."));
+    console.error();
+
+    // Exit cleanly after update
+    process.exit(0);
+  } catch (err) {
+    console.error();
+    console.error(pc.red(pc.bold("✗ Auto-update failed")));
+    console.error(pc.dim("  Please update manually:"));
+    console.error();
+    console.error(pc.cyan(`  curl -fsSL ${RAW_BASE}/cli/install.sh | bash`));
+    console.error();
+    // Continue with original command despite update failure
+  }
 }
 
 // ── Public API ─────────────────────────────────────────────────────────────────
@@ -124,33 +154,32 @@ export async function checkForUpdates(): Promise<void> {
 
   // Skip if we checked recently
   if (!shouldCheckForUpdate()) {
-    // Show cached notification if available
+    // Auto-update if cached version is newer
     const cache = readUpdateCache();
     if (cache?.latestVersion && compareVersions(VERSION, cache.latestVersion)) {
-      printUpdateNotification(cache.latestVersion);
+      performAutoUpdate(cache.latestVersion);
     }
     return;
   }
 
-  // Fetch latest version (non-blocking, don't await)
-  fetchLatestVersion()
-    .then((latestVersion) => {
-      if (!latestVersion) return;
+  // Fetch latest version (blocking for auto-update)
+  try {
+    const latestVersion = await fetchLatestVersion();
+    if (!latestVersion) return;
 
-      const now = Math.floor(Date.now() / 1000);
+    const now = Math.floor(Date.now() / 1000);
 
-      // Update cache with latest check time
-      writeUpdateCache({
-        lastCheck: now,
-        latestVersion,
-      });
-
-      // Show notification if newer version is available
-      if (compareVersions(VERSION, latestVersion)) {
-        printUpdateNotification(latestVersion);
-      }
-    })
-    .catch(() => {
-      // Silently fail - update check is non-critical
+    // Update cache with latest check time
+    writeUpdateCache({
+      lastCheck: now,
+      latestVersion,
     });
+
+    // Auto-update if newer version is available
+    if (compareVersions(VERSION, latestVersion)) {
+      performAutoUpdate(latestVersion);
+    }
+  } catch {
+    // Silently fail - update check is non-critical
+  }
 }
diff --git a/cli/src/version.ts b/cli/src/version.ts
index 52c905c1..edbab618 100644
--- a/cli/src/version.ts
+++ b/cli/src/version.ts
@@ -1 +1 @@
-export const VERSION = "0.1.0";
+export const VERSION = "0.2.0";